When you buy with the idea to rent out the property you stand a chance of earning a profit while paying your off your bond.
Buying-to-rent is very popular amongst investors but should be considered carefully.
Here are some tips to guide you through the process of buying-to-let: 1.
Do In-Depth Research It is important to know what you are letting yourself in for.
If this is the first time you are buying to let make sure to seek advice from an expert or other buy-to-let investors.
In tough economic times it might be easier to find tenants but when the property market is booming you might struggle to avoid you property sitting empty.
Make sure you enter the market at the right time.
2.
Choose a Good Area A good area does not necessarily mean the most expensive or upmarket suburb, but rather an area that shows potential.
If you are buying-to-rent with students accommodation in mind, make sure the area is close to campus or within easy access of public transport.
3.
Consider All Areas - Near or Far From Where You Reside Buying-to-rent does not always mean you have to live close by.
There might be better offers further away from your residence that could be a wiser investment.
There are lots of ways to keep ahead of what's going on at your rental property.
4.
Shop Around You don't always have to use the same bank for all your mortgages.
Seek advice from a specialist buy-to-rent broker and remember you are under no obligations to use a broker once you have asked for information.
Considering all options might save you a lot of money.
5.
Negotiate the Price As with first time buyers, you are not reliant on selling a property to buy another and hence hold a smaller risk.
Remember this when negotiating for a better price.
6.
Consider the Negative Side to Buying-to-Let As stated before, rental demand is often dependent on the economical times.
You have to be prepared for a slower rental market and all the challenges that come with renting out property.
Factor in that your property might sit empty for at least 2 months of the year - thus leaving yourself a buffer.
7.
Don't be Over Ambitious Because there is no such thing as a 100% sound investment there will always be risk involved.
It is important to consider everything before you jump in.
Talk to financial advisers and seek advice from friends and family whom you trust.
8.
Follow the 12% Rule An easy way to work out an achievable rental price is to divide the purchase price by 100.
This will give you a rental figure that needs to be obtained to achieve 12% gross income.
This does not apply to all property but will give you a good estimate.
9.
Don't Spend Too Much on Renovation/Refurbishment If you are a first time buy-to-rent investors you should take on a property that needs little of no renovation.
This will only cause unnecessary stress.
Rather decorate the interior with neutral colors that offer a blank canvas to potential tenants.
10.
Find the Right Tenant This is one of the most import steps when buying-to-rent.
Make sure to advertise in the right places to attract the ideal candidate.
Always screen potential tenants and try to find out as much as possible about them.
Ensure a good relationship with tenants, as they will be living in your property.
Make sure you have the funds to pay for a letting agent should you need one.
Seek legal advice when drawing up a rental contract.